New Delhi: The fiscal deficit narrowed by 33.76% year-on-year to Rs1.62 lakh crore in April-October 2010, on the back of better-than-expected revenue from the sale of 3G spectrum and robust tax collections.
In comparison, the Centre’s fiscal deficit stood at Rs2.45 lakh crore in the corresponding period of the previous financial year.
The government collected Rs2.71 lakh crore in taxes during the seven-month period, which was 50.9% of the Budget target for the entire fiscal. In comparison, tax collections during the same period last fiscal only amounted to 45.1% of the whole-year target.
Non-tax revenue in April-October 2010, stood at Rs1.48 lakh crore, higher than the Budget estimate for the entire fiscal, primarily because of higher realization from the auction of spectrum, which raked in approximately Rs70,000 crore more than the government estimated.
However, expenditure also rose by 15% during the period to Rs6.17 lakh crore from over Rs5.36 lakh crore in the year ago period.
At Rs1.62 lakh crore, the fiscal deficit in April-October 2010, amounted to 42.6% of the Budget estimate of Rs3.81 lakh crore for the entire 2010-11, according to data released by the Controller General of Accounts.
This time last year, the fiscal deficit was 61.1% of the Budget estimate for the entire 2009-10 financial year.
Fiscal deficit targets went awry after the government provided a stimulus to the economy in the aftermath of the global financial crisis that broke out in 2008. Among the measures, the government slashed taxes and stepped up public expenditure to spur growth of the economy. However, this also led to widening of the fiscal deficit.
As a result, the fiscal deficit doubled to over 6% in 2008-09, as against the maximum permissible limit of 3% stipulated by the Fiscal Responsibility and Budget Management Act. The deficit rose further to over 6.5% last fiscal.
After the government partially rolled back the stimulus by raising excise duty, the Budget estimates pegged the fiscal deficit at 5.5% of GDP.
However, despite higher realization from the sale of spectrum for high-speed telephony and broadband services, the government expects the fiscal deficit to be contained at the same level as its Budget estimates or marginally lower.
“I feel that fiscal deficit target that we have set for ourselves of 5.5%, I expect that target to be met and maybe for us to do a little better than that. So we are on track on our fiscal policy,” chief economic advisor Kaushik Basu told reporters.